The IRS released technical amendments that delay the effective date of the temporary regulations it issued in December 2011 governing whether tangible property expenses could be deducted or had to be capitalized.
Advertisement
Topics
Methods
Effective Date of Tangible Property Regs. Delayed
The IRS announced it is delaying the effective date of the temporary regulations it issued in Dec. 2011 governing whether tangible property expenses could be deducted or had to be capitalized.
IRS to Allow Automatic Accounting Method Changes in Corporate Reorganizations
The IRS announced a change in its policy on automatic accounting method changes in corporate reorganizations.
Automatic Accounting Method Changes to Be Allowed in Corporate Reorganizations
The IRS announced a change in its policy on automatic accounting method changes in corporate reorganizations.
Corporation Cannot Deduct California Business Privilege Tax in Year Paid
An accrual-basis taxpayer could not deduct the California business privilege tax in the year it was paid, even though California treated the tax as being incurred in that year.
Customer Reward Programs: Deducting Fulfillment Costs Prior to Economic Performance
Regs. Sec. 1.451-4 provides a narrow exception to the economic performance rules that allows accrual-basis taxpayers who issue premium coupons (or trading stamps) to deduct the estimated fulfillment cost of the coupons (or stamps) at the time they are issued.
Nonaccrual-Experience Book Safe-Harbor Method
Taxpayers generating revenues from services may now be able to use the nonaccrual-experience book safe-harbor method to exclude qualifying uncollectible revenues from taxable income.
Recurring-Item Exception: Can Economic Performance Be Accelerated?
Rev. Rul. 2012-1 addresses the application of the economic performance rules and whether the recurring-item exception may be applied to accelerate economic performance with respect to liabilities for the lease of equipment and a related maintenance agreement.
Removal of Sec. 163(j) Limitation Does Not Qualify as Accounting Method Change
The IRS concluded that removing the Sec. 163(j) limitation on the deduction of interest paid on a loan from a related party does not qualify as an accounting method change under Sec. 446.
Tax Method Accounting Change Required for Change in Book Recognition on Multiple-Deliverable Contracts
Taxpayers using the one-year deferral method to recognize advance payments on multiple-deliverable contracts for federal income tax purposes should note that a change in the underlying revenue recognition method used for book purposes could trigger a tax accounting method change in the year of the change.
IRS Issues Guidance on Accounting Method Changes for Repair Regs.
The IRS issued two revenue procedures detailing how taxpayers may obtain IRS automatic consent to the accounting method changes required by the new repair and tangible property regulations.
IRS Issues Prop. Regs. on Retail-Inventory Method
Taxpayers using the retail-inventory method should review their calculations to determine if they are currently reducing both the numerator of the cost-complement ratio and the retail selling price of ending inventory for sales-based vendor allowances and related markdowns.
IRS Suspends Repair/Capitalization Exams Pending Accounting Method Changes
The IRS issued a directive for field examinations on the repair vs. capitalization issue that essentially suspended current examinations so as to permit taxpayers to file accounting method changes under just-issued revenue procedures.
Much-Anticipated Guidance Issued on Accounting Method Changes for Repair Regs.
The IRS issued two revenue procedures detailing how taxpayers may obtain IRS automatic consent to the accounting method changes required by the rules.
Tangible Property Costs and Repair Expenditures Regs.
The IRS issued long-awaited regulations regarding the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets, including rules on determining whether costs related to tangible property are deductible repairs or capital improvements.
Recurring-Item Exception Clarified
The IRS clarified the application of the all-events test’s recurring-item exception under Sec. 461(h)(3) to certain fact patterns involving liabilities that accrue over more than one year and service contracts.
Proposed Regs. Relating to the Retail-Inventory Method
The IRS issued proposed regulations relating to the retail-inventory method of accounting.
Fourth Circuit Rejects Retroactive Accounting Method Change
The Fourth Circuit upheld a 2008 Tax Court decision that a company could not retroactively change its method of accounting for credit card late fees even though it was on an improper method.
IRS Provides Safe Harbor for Nonaccrual-Experience Accounting Method Taxpayers
The IRS issued guidance providing a book safe-harbor accounting method for taxpayers that use the nonaccrual-experience accounting method under Sec. 448(d)(5) and Regs. Sec. 1.448-2.
Regulations Issued on Repair Expenditures
The IRS issued long-awaited regulations regarding the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets, including rules on determining whether costs related to tangible property are deductible repairs or capital improvements.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
